TIME AND THE COST OF CHILDREN

This paper uses the "adult goods" method to estimate the full costs of children. Full costs include both expenditure and time costs. Adult personal time (comprising pure leisure, sleep and other personal care) is used as the adult good. Previous research has shown that the presence of children in the household leads to a reduction in adult personal time. This paper develops a simple economic model of the household to show how this information can be used to develop an equivalence scale for adult consumption that takes account of both the expenditure and time costs of children. Preliminary estimates using Australian data suggest a very large cost—much higher than that typically assumed for expenditure costs. The full cost of children declines with age, despite the expenditure cost rising. The paper discusses the limitations of the adult good method and the assumptions needed to draw welfare conclusions from these and other estimates of child costs.     

The Household, Time Use and Tax Policy

This paper is concerned with modelling household decisions andthe welfare effects of tax policy. It seeks to emphasise theimportance of a model that incorporates household productionand can take account of the evident female labour supply heterogeneityacross two-parent families. If, after having children, someproportion of households substitute domestic for market laboursupply, the income and consumption variables used as the taxbase in most countries may be poorly correlated with livingstandards. Taxes and welfare programs based on these variablesmay increase inequality by shifting the overall tax burden tolow and middle wage families with both partners in work, awayfrom families with much higher wages and in which only one memberworks to earn the same joint market income. The paper combinesdata on time use, income, taxes and benefits to show how theytrack female labour supply over the life cycle, resulting inmuch higher tax burdens on two-earner households. (JEL D13,D91, H31, J22)     

Identifying non-cooperative behavior among spouses: Child outcomes in migrant-sending households

I propose a model of household decision-making under asymmetric information and show that resulting allocations may not be fully cooperative. The model yields a simple test for cooperative decision-making, which I apply to data from China. I find that, when the father migrates without his family, children spend more time in household production, while mothers spend less time in both household production and income-generating activities. This is not consistent with standard cooperative models of the household: simply reallocating time to compensate for the father's absence would cause an increase in household labor for both children and mothers and, if migration occurs in response to a negative shock, we should observe an increase in mothers' time in income-generating activities rather than a reduction. The results also do not appear to be driven by an increase in mothers' bargaining power, as children's human capital is not affected by migration, controlling for income.     

Educational expenditure in urban China: income effects,family characteristics and the demand for domestic and overseas education

Analysing survey data from 32 selected cities across China in 2003, this article examines parents’ expenditure on their children's education from two aspects: factors affecting domestic education expenditure and factors affecting expenditure on overseas education. The main findings that emerge from this study are as follows. First, household income has significant effects on the magnitude of the domestic and overseas educational expenditures. Second, households where mothers have senior secondary school or college education, and fathers are working in professional occupations are likely to spend more on education for their children. Third, being in the highest income category, having a college-educated father, having a mother who is a cadre or middle professional and living in a coastal area significantly enhances the probabilities for the households sending their children overseas for education.     

Education, segregation and marital sorting: theory and an application to the UK

This paper presents a model of the intergenerational transmission of education and marital sorting. Parents matter both because of their household income and because their human capital determines the distribution of a child's disutility from making an effort to become skilled. We show that an increase in segregation has potentially ambiguous effects on the proportion of individuals that become skilled in the steady state, and hence on marital sorting, the personal and household income distribution, and welfare. We calibrate the steady state of our model to UK statistics. We find that an increase in the correlation of spouses in their years of education will bring about a small increase in the proportion of skilled individuals when the relative supply of skilled individuals is variable at the family level and a decrease when this supply is fixed. Ex-ante utility (of an unborn individual) increases in the first case and decreases in the second. The welfare effect of increased sorting is negative for unskilled individuals and positive for skilled individuals. Increased segregation always leads to an increase in welfare inequality between skilled and unskilled individuals.     

Subjective welfare,isolation, and relative consumption

The recent literature has shown that subjective welfare depends on relative income. Much of the existing evidence comes from developed economies. What remains unclear is whether this is a universal human trait or an artifact of a prosperous, market-oriented lifestyle. Using data from Nepal, a mountainous country where many households still live in relative isolation, we test whether poorer and more isolated households care less about relative consumption. We find that they do not. We investigate possible reasons for this. We reject that it is due to parental concerns regarding the marriage prospects of their children. But we find evidence in support of the reference point hypothesis put forth by psychologists: household heads having migrated out of their birth district still judge the adequacy of their consumption in comparison with households in their district of origin.     

Bowling alone, drinking together

This paper investigates to what extent youth alcohol consumption depends on consumption patterns by other household members and on social interactions outside the household. Exploiting the richness of the data, we explore the possibility of asymmetric social influences by gender and by age, the differences between use and abuse and among different types of alcohol consumption (beer, wine and spirits). Moreover, we control for contextual effects, such as variables related to neighbourhood and family background. We find that both the drinking intensity by other household members and a richer social life outside home are positively related to alcohol consumption. We also find that siblings are more influential than parents, that the mother is more influential for females and the father for males.     

Microfinance and gender empowerment

In this paper, we develop a theoretical model of household production, bargaining and credit to analyse how access to microcredit affects intra-household decision-making and welfare, and identify conditions under which female household members are most likely to benefit. We show that, consistent with ethnographic accounts of the impact of microcredit programmes on poor households, access to loans can lead to a variety of outcomes for intra-household decision-making and welfare depending on initial conditions and that, in some instances, women borrowers may experience a decline in welfare. We identify two instances in which a woman is most likely to benefit: when there is scope for investing the loan profitably in a joint activity, and when a large share of the household budget is devoted to household public goods.     

Money,liquidity and welfare

This paper develops an analytically tractable Bewley model of money demand to shed light on some important questions in monetary theory, such as the welfare cost of inflation. It is shown that when money is a vital form of liquidity to meet uncertain consumption needs, the welfare costs of inflation can be extremely large. With log utility and parameter values that best match both the aggregate money demand curve suggested by Lucas (2000) and the variance of household consumption, agents in our model are willing to reduce consumption by 3–4% to avoid 10% annual inflation. The astonishingly large welfare costs of inflation arise because inflation increases consumption risk by eroding the buffer-stock-insurance value of money, thus hindering consumption smoothing at the household level. Such an inflation-induced increase in consumption risk at the micro level cannot be captured by representative-agent models or the Bailey triangle. Although the development of financial intermediation can mitigate the problem, with realistic credit limits the welfare loss of moderate inflation still remains several times larger than estimations based on the Bailey triangle. Our findings provide a strong justification for adopting a low inflation target by central banks, especially in developing countries where money is the major form of household financial wealth.     

The effects of welfare and tax reform: the material well-being of single mothers in the 1980s and 1990s

The tax and welfare programs that provide income and in-kind benefits to single mothers have changed dramatically in recent years. These changes began as far back as the mid-1980s and culminated with the 1996 welfare law that ‘ended welfare as we knew it.’ These tax and welfare changes have sharply increased the employment of single mothers and cut welfare rolls. However, little is know about the effects of these policy changes on the material well-being of single mothers and their children. Studies of those leaving welfare have found that a substantial percentage have problems paying rent, purchasing enough food, and paying utility bills. Other studies found a decline in income among the worst-off single mothers after 1994 or 1995. The goal of this paper is to examine the material well-being of single mothers and their families before and after recent welfare and tax reforms. Using data from two nationally representative household surveys we examine the consumption patterns of single mothers and their families from 1984–2000. We find that the material conditions of single mothers did not decline in recent years, either in absolute terms or relative to single childless women or married mothers. This pattern holds for the average single mother as well as for low-educated single mothers at both the 15th and 25th percentiles of the consumption distribution. In most cases, our evidence suggests that the material conditions of single mothers have improved slightly.     

Tax distortions, household production, and black-market work

This paper studies an economy with high- and low-productivity households. Household services are produced either by households themselves or are purchased in a white or black market. Black market work is inefficient (efficient) when it otherwise would have been done in the white market (within the household). With low (high) tax wedges, the black market reduces (increases) welfare by competing with white-market production (own-household production). With intermediate tax wedges, the welfare effect of a black market is ambiguous: welfare is improved (reduced) when black services are demanded by low- (high-) productivity households. An increase in the tax wedge may then reduce the benefits from a black service market.     

Analysis of School Enrollment in Ghana: A Sequential Approach

In this paper, we depart from the standard way of analyzing school enrollment by accounting explicitly for educational selectivity in order to examine the determinants of child school enrollment in Ghana. Using data from the Ghana Living Standard Survey round 6 (GLSS 6), we estimate a three‐step sequential logit model for the determinants of secondary school enrollment and its dependence on completing primary school. We find that family resources such as parental education, household income and the gender of the head of the household play a role in households' child schooling decisions. Educated parents are relatively more likely to enroll their children in primary school and keep them in school until they complete primary education. As well, we show that educated parents do not promote a gender‐biased investment in the schooling of children at the primary level. While household welfare does not influence children's entry into primary school importantly, their completion of primary school depends on household welfare. The study sheds more light on the pro‐male bias phenomenon regarding entry into primary school and primary school completion. Policies to promote the achievement of Sustainable Development Goal 4 in Ghana must be grade sensitive.     

A SIMPLIFIED MODEL FOR SOCIAL WELFARE ANALYSIS: AN APPLICATION TO SPAIN, 1973–74 TO 1980–81

Most of the literature on income distribution has concentrated on inequality. In this paper we introduce a concern for efficiency in a social welfare model. We propose a simple but useful specification which combines three features: (i) the selection of measurement instruments in the relative and the absolute case on the grounds of their properties for applied work; (ii) a procedure to make welfare comparisons across households with different needs, in a model in which equivalence scales depend only on house-hold size; and (iii) the use of household specific statistical price indices to make intertemporal comparisons in real terms. The methodology is applied to the study of the role of prices and demographic effects in the evolution of the standard of living in Spain from 1973–74 to 1980–81.     

Consumer welfare from publicly supplemented private goods: age and income effects on demand for health care

In spite of major advances in the theoretical, positive and normative, literature analysing the welfare implications of public provision of private goods, empirical investigation is often limited to contingent valuation studies, for example, of health care programmes. In this article we argue that when a market for a (subsidised or free of charge) publicly provided good exists, a consumer demand approach can be used to construct a money metric of welfare corresponding to the consumption of public provision. We illustrate this approach in investigating age and income effects on household demand for health care in Cyprus, where free public provision is not universal and those entitled to it often resort to private supplementation. Our findings suggest that the money metric of welfare, which consumers attach to free access to publicly provided health care, varies with age and to a lesser extent with household income.     

Welfare rules,business cycles,and employment dynamics among lone parents in Norway

How lone parents combine work and welfare in earning a living has long inspired discussion. Yet little is known of their actual labor market attachment, either over calendar time or during individual lifetimes. In this article we address both issues, first by studying Norwegian Labor Force Surveys to illuminate the labor force participation of lone parents during the last two decades and by comparing the trends revealed with similar developments among married and cohabiting parents. Next, we analyze individual labor market transitions, using longitudinal data from administrative registers. The analyses demonstrate large differences in the labor market behaviors of single and nonsingle parents in Norway, even when controlling for differences in human capital and care responsibilities. Shifting labor demand and welfare reforms that prioritize paid work have both affected the employment of lone parents, but favorable economic conditions seem to have played a larger role than stringent social policies in increasing their employment activity.     

Childhood obesity and the income gradient: evidence from Australia

This article examines the dynamic nature of human capital formation in the context of childhood obesity and the association of household income and childhood obesity in Australia using the first five waves of the Longitudinal Study of Australian Children. Our results show a strong evidence of dynamic nature of child obesity: the lag obesity is a significant and robust predictor of obesity in the current period. We also found that the main channel for childhood obesity is inter-generational trait: the probability of obesity in children born to an obese mother or father is 15% higher than that of other children. Other important determinants are lifestyle factors, including the consumption of drinks with a high sugar content and the amount of time watching TV. Income becomes an insignificant determinant of childhood obesity once we control for unobserved individual heterogeneity.     

Intergenerational transfers,demographic transition,and altruism: Problems in developing Asia

This paper develops a three‐period overlapping‐generations model where middle‐aged agents care about not only their own lifetime utility but also their old parents' and children's well‐being. The doubly altruistic agents choose amounts of intergenerational transfers to their old parents and children as well as private savings. The government specifies amounts of public transfers from working adults to the dependents. The model also takes the effects of demographic transition on the burdens of supporting the elderly and children into account. Using 23 countries' data from the National Transfer Accounts (NTA ), we estimate the degrees of filial and parental altruism and adjust them for their respective life expectancy and fertility rates. The findings suggest that people in developing countries are more parentally altruistic than those in developed ones while the adjusted degree of filial altruism tends to be low in developing Asia. Our welfare analyses reveal that the developing Asian countries must introduce more comprehensive public welfare programs for the elderly to maximize social welfare. Moreover, their low adjusted degree of filial altruism may trap the developing Asian countries at the low levels of public old‐age support and social welfare as the further demographic transition ensues.     

Expenditure behavior and children's welfare: an analysis of female headed households in Jamaica

This paper presents an analysis on the expenditure behavior and children's welfare among female-headed households in Jamaica. Included in the examination of household composition are the demographic effects, endogeneity of total expenditure, the headship variable and the endogeneity of family structure. Using the 1989 Jamaican Survey of Living Conditions (SLC), expenditure estimation on over 100 goods for 3500 household was examined. This study utilized the Ordinary Least Square estimates, 2 SLC and endogeneity tests, and partnered and unpartnered household heads. Results for the demand for preventive health care were significant among older children in female-headed households, with a 4% increase in the probability of a check-up across all ages. This study presents a partial explanation of lower morbidity rates in female-headed households despite lower budget and total per capita expenditure levels. In conclusion, this study confirms the significant influence of sex and union status of the household head on household expenditure behaviors with implications for individual household members, with more positive outcomes among children despite differences in budget allocation and lower health expenditures.     

Consumption,welfare, and stochastic population dynamics when technology shocks are (Un)tied

The impact of uncertainty on consumption and welfare seems obvious; because of the precautionary saving motive, higher uncertainty reduces consumption, and subsequently, deteriorates welfare. Recent several studies, however, find that this intuitive narrative is not necessarily true. This paper provides the analytical underpinnings for this. In the absence of technological progress, I find that the larger demographic shocks always reduce consumption, but improve the welfare of households. Moreover, when demographic shocks are negatively tied to technology shocks, there emerges an inverted-U relationship between the size of two shocks and consumption, and a U-shaped relationship between the size of two shocks and household welfare. These results are all characterized analytically in the framework of the stochastic two-sector growth model featuring the correlated Brownian motion process. The findings suggest that demographic policies should not be implemented with no reference to the state of technology.     

Policy Rules for Exploitation of Renewable Resources: A Macroeconomic Perspective

A fundamental problem for an economy based on a common property resource is the absence of a market to trade the resource. This implies that private costs will be below social costs. This paper investigates possible government interventions that correct for such distortions in a neoclassical growth model with a production externality in harvesting. The model predicts that the welfare of the representative household increases considerably when a Piguovian tax is implemented. The policy that replicates the command optimum is highly complex and changes over time. On the other hand, a large share of the maximum welfare increase is internalized by introducing a constant quantity tax, suggesting that the potential of such policies is high.